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Compliance Alert: IRS Releases 2019 HSA Contribution Limits and HDHP Deductible and Out-of-Pocket Limits

May 24, 2018

Employee Benefits

In Rev. Proc. 2018-30, the IRS released the inflation adjusted amounts for 2019 relevant to HSAs and high deductible health plans (HDHPs). The table below summarizes those adjustments and other applicable limits.

2019 2018 Change
Annual HSA Contribution Limit
(employer and employee)
Self-only: $3,500
Family:
$7,000
Self-only: $3,450
Family:
$6,900*
Self-only:
+$50
Family:
+$100
HSA catch-up contributions
(age 55 or older)
$1,000 $1,000 No change
Minimum Annual HDHP Deductible Self-only: $1,350
Family:
$2,700
Self-only:
$1,350
Family:
$2,700
No change
Maximum Out-of-Pocket for HDHP
(deductibles, co-payment & other amounts except premiums)
Self-only: $6,750
Family: $13,500
Self-only: $6,650
Family:
$13,300
Self-only: +$100
Family:
+$200

* After reducing the cap $50 in Rev. Proc. 2018-18 in March 2018 due to changes made by the Tax Cuts and Jobs Act, the IRS granted relief in Rev. Proc. 2018-27, restoring the limit back to the original 2018 level. We do not anticipate that the 2019 HSA annual family contribution limit will change as it did for this year.

Out-of-Pocket Limits Applicable to
Non-Grandfathered Plans

The ACA’s out-of-pocket limits for in-network essential health benefits have also been announced and have increased for 2019.

2019 2018 Change
ACA Maximum
Out-of-Pocket
Self-only: $7,900
Family:
$15,800
Self-only: $7,350
Family:
$4,700*
Self-only:
+$550
Family:
+$1,100

Note that all non-grandfathered group health plans must contain an embedded individual out-of-pocket limit within family coverage, if the family out-of-pocket limit is above $7,900 (2019 plan years) or $7,350 (2018 plan years). Exceptions to the ACA’s out-of-pocket limit rule are available for certain small group plans eligible for transition relief (referred to as “Grandmothered” plans). A one-year extension of transition relief was recently announced extending the transition relief to policy years beginning on or before October 1, 2019, provided that all policies end by December 31, 2019.

Next Steps for Employers

As employers prepare for the 2019 plan year, they should keep in mind the following rules and ensure that any plan materials and participant communications reflect the new limits:

  • HDHPs cannot have an embedded family deductible that is lower than the minimum HDHP family deductible of $2,700.
  • The out-of-pocket maximum for family coverage for an HDHP cannot be higher than $13,500.
  • All non-grandfathered plans (whether HDHP or non-HDHP) must cap out-of-pocket spending at $7,900 for any covered person. A family plan with an out-of-pocket maximum in excess of $7,900 can satisfy this rule by embedding an individual out-of-pocket maximum in the plan that is no higher than $7,900. This means that for the 2019 plan year, an HDHP subject to the ACA out-of-pocket limit rules may have a $6,750 (self-only)/$13,500 (family) out-of-pocket limit (and be HSA-compliant) so long as there is an embedded individual out-of-pocket limit in the family tier no greater than $7,900 (so that it is also ACA-compliant).

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This alert was prepared for Woodruff Sawyer by Marathas Barrow Weatherhead Lent LLP, a national law firm with recognized experts on the Affordable Care Act. Contact Peter Marathas or Stacy Barrow at pmarathas@marbarlaw.com or sbarrow@marbarlaw.com.

The information provided in this alert is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our lawyers or our clients. This is not legal advice. No client-lawyer relationship between you and our lawyers is or may be created by your use of this information. Rather, the content is intended as a general overview of the subject matter covered. This agency and Marathas Barrow Weatherhead Lent LLP are not obligated to provide updates on the information presented herein. Those reading this alert are encouraged to seek direct counsel on legal questions. © 2018 Marathas Barrow Weatherhead Lent LLP. All Rights Reserved.

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